Fascism and the Crisis of Pax Americana

Gregory Meyerson and Michael Joseph

We propose that the current discourse on fascism has arisen from a general crisis of Pax Americana arising from a convergence of developments, long-term and short, pervading the social order and thus rendering much of it dysfunctional and dystopian. In short, the general crisis is the state of Pax Americana in irreversible economic and political decline. While the myriad long-term causes of the general crisis are rooted in the mid-1970s, the terrorist attacks in September 2001 and the invasion of Iraq 18 months later turned a protracted crisis into an acute stage, thereby setting into motion an intensification of fascist processes, which will, in time, become the basis for a distinct fascist trajectory.

Although we recognize that a complete treatment of this question must include an analysis of cultural conditions, we choose here to focus on the economic and political aspects of the general crisis because it is precisely the problem of political economy that has up to now been ignored, and it is this dimension of the crisis that drives the contradictions we see leading to an intensification of fascist processes. And so our goal is to zero in on breakdown processes internal to the present stage of U.S. capitalism. Here, our mode of abstraction follows Bertell Ollman’s prescriptions (1993) for Marxist methodology: “Everyone,” he notes, tries “to make sense of his or her surroundings by distinguishing certain features” to focus on and organize. For Ollman, abstraction means that “a piece has been pulled from or taken out of the whole and is temporarily perceived as standing apart” (24). Accordingly, we are setting aside the analysis of culture and of the current state of class struggle to focus on the political and economic structure, knowing that ultimately it is the totality which must be comprehended. We will return to the question of class struggle in our conclusion.

This view marks a clear departure from current discussions on the Right and Left about the threat of fascism in the future or from those who claim that it is already upon us.1 For example, many liberal and leftist analyses point to striking resemblances between Protestant fundamentalism operating in the broader context of right-wing populism, and European fascist movements in the 1920s and 1930s.2 For other liberals and leftists, it is the neoconservatism of the Bush administration that signals the threat of fascism or something dangerously close to it.3 A related position, which we will discuss, sees the matter more broadly, focusing on financialization and militarization as potentially leading to fascism, but disconnects both from any systemic imperative under capitalism (Johnson 2006). There is also an interpretation that views fascism or collapse emerging from contingencies of the American empire that threaten its ability to handle the problems of peak oil and global warming (Roberts 2004, 2007; Phillips 2006; Leggett 2006; Klare 2002, 2004, 2007). One version of this position offers “a new New Deal” or Marshall Plan driven by green capitalism as a possible, but by no means certain, way to ward off the catastrophe (Klein 2007).4

Our interpretation contests all such assumptions to varying degrees. Against prevailing liberal and leftist interpretations, we reject the view that fascism or an intensification of fascist processes will be achieved by religious fundamentalism, a rogue wing of the ruling class, or both.5 While recognizing that current conditions are fueling the idea of fascism via a neoconservative hijacking of American democracy, we argue that the intensification of fascist processes will come from the ruling class as a whole. Our analysis of fascism is thus a class analysis. It rests on defining fascism as a functional property of monopoly capitalism in crisis.6

Our thesis is in part an extension of observations made by Paul Sweezy in his 1942 work, The Theory of Capitalist Development. Writing at a time when much of the world was fighting fascism, Sweezy pondered what it might look like in the future. Noting that the seeds of fascism are always present in capitalism, he saw the possibility of future fascist forms developing in response to peculiar crisis situations. He wrote: “So far as history allows us to judge – and in questions of this sort there is no other guide – a prolonged and ‘unsuccessful’ war is the only social phenomenon sufficiently catastrophic in its effects to set in train this particular chain of events” (1970: 346). Such a war might lead to conditions ripe for fascism, especially if they occurred at a time when capitalist structures were, as he put it, “severely injured and not yet overthrown.”

For Sweezy, it was not inconceivable that a prolonged economic crisis alone could produce “substantially the same results,” though only if “the structure of capitalist rule [had] already been seriously undermined.” It seemed unlikely to him that World War II, a war fought against fascism, would usher in fascism in the United States. In 1942, it was clear to Sweezy that the structure of capitalist rule in the United States was indeed far from undermined. But he was aware that things could change: “To be sure, if we had to anticipate an endless succession of wars in the future, matters would almost certainly turn out differently” (1970: 347).

In our view, the general crisis of Pax Americana represents the historic convergence of Sweezy’s two main criteria (in 1942) for fascism in the future: a “profound and long-drawn-out” economic crisis – one that Sweezy and Harry Magdoff (1988) deemed “irreversible” more than 40 years later – accompanied by an “endless succession of wars.” Further, Sweezy contended that a possible fascism was “not a question of a single nation but rather of the world economy as a whole.” In other words, fascism would likely reappear in forms differing from their historical predecessors given the changing structures of world capitalism. If fascism between the wars reconsolidated the nation-states of Germany and Italy, readying them for imperialist expansion, a U.S. fascism emerging in the acute stage of the general crisis would flow from an empire in decline (the protracted crisis of U.S. hegemony), itself fundamentally entangled with what István Mészáros (2006) has called capital’s structural crisis. The multiple parts of this crisis include the deepening contradictions of debt, geopolitics, energy, and climate.

We call the period since September 2001 the acute phase of the crisis not because we can predict with anything close to certainty how its parts will play out, or how they will entangle, but because the U.S. ruling class – whatever its divisions – has gone to war in an initial attempt to ward off these contradictions or to position itself as best able to confront them. The situation the United States faces is simply too complex and volatile for anyone to determine the precise timing of events, but it is obvious that the volatility alone of the current debt crisis, with its implications for the role of the dollar as reserve currency, could lead to explosions and insuperable contradictions. If we add to this the possibility – fairly high it seems to us – that the moment of peak oil is nigh, financial panic is likely to break out and the U.S. will be especially hard hit. If emergencies caused by global warming manifest themselves earlier rather than later, as seems to be happening, and entangle with the others, things could get very bad very quickly. Crises of energy and environment bring with them crises of food and water, which themselves amplify the very crises that gave them birth. Water shortages, produced in part by the ongoing exploitation of resources under capitalism and by drought patterns caused by global warming (itself induced by capitalism), will undermine efforts to deal with the energy crisis. In turn, considerations of profitability make the ruling class’s way of dealing with the energy crisis likely to exacerbate the crises of climate, food and water. Let’s add to this mix the rather high probability of some kind of terrorist attack in the U.S. coming out of the “endless war on terror,” combined with panicky and racist immigration policy perfectly compatible in our postmodern age with multicultural celebration – and it’s not hard to envision the spread of detention camps of immigrants, “foreign terrorists” and those targeted in the “Violent Radicalization and Homegrown Terrorism Act of 2007” (H.R. 1955), which passed the U.S. House by a 404-6 vote.

For all these reasons, we are pointing to the probability of clustered crises producing amplifying feedbacks, to borrow a term from climatologists, within and without a U.S. political and economic structure that both liberals and Marxists agree is seriously underprepared for what lies ahead: an authoritarian response to these conditions, what we call an intensification of fascist processes on its way to a clear fascist trajectory. What Joel Kovel (2002) has written looks to us, unfortunately, about right:

Fascism is an inherent breakdown pattern of capitalism. To say ‘it can’t happen here’ is to misread the explosive tensions built into the capitalist system. All it takes is a certain degree of crisis and fascism may be imposed as a revolution from above to install an authoritarian regime in order to preserve the main workings of the system. Regressive ideologies and racism are then introduced as ways of reestablishing legitimacy and displacing conflict. So much was learned in the last century; what we are poised to learn in this one are the fascist potentials in a capitalist system facing crisis of an ecological kind. We may imagine this in the context of pandemics or terrorist induced breakdown, or famine or global warming or ozone depletion, of the inevitable reckoning as shrinking petroleum supplies become uneconomical to extract and replacements remain insufficient or as any consequence of non-linear ecosystemic breakdown on a world scale (185).

We would correct Kovel on one essential point: fascism is counterrevolution from above and historically has co-opted counterrevolutionary movements from below. We would emphasize, along with Kovel, that the key crisis is the political-economic one, because it is only in relation to this crisis that the parts of the crisis enumerated above take on their specific character – of the kind that might lead to fascism, the utter ruin of the contending classes, or just utter ruin, imagined so horrifically in our best literature.7 In this position, we differ from those who think fascism might come if U.S. capitalism doesn’t act now to address the energy and environmental crises – though we think there is a good deal of insight in this position. And we differ from those who see civilization as the problem, or industrial society, or agriculture, or population (these positions often flirt with an updated version of Malthusianism). Liberals and some leftists see the choice before us as fascism or some version of the New Deal, with most focusing on green capitalism, a green New Deal, or green Marshall Plan. Put another way, all these proposals simply ignore the paradoxical and contradictory unity of Late Capitalism by seeking to remove “bad” capitalism from “good” capitalism.

But because of capitalism’s insuperable contradictions combined with certain particulars of U.S. capitalism, we think that a “new New Deal” is unlikely and inadequate to the task of meeting the energy and environmental crises. At bottom, the capitalist solution to the energy and environmental crises is technological. But as John Bellamy Foster points out, you can’t achieve sustainability by funding green technologies from a continually expanding capitalism. This means one step forward and two steps back, burning one head of the hydra only to replace it with two.

The Case for a General Crisis

Since the early 1970s, U.S. capitalism has undergone a protracted and deepening socio-economic crisis and with it a steady erosion of liberal, capitalist democracy. As we have said, liberals seize upon the latter to proclaim that America is becoming – or already has become – fascist. At the same time, quite a few Marxists have described “crises” of various kinds while evading the question of fascism as a likely or possible outcome. For example, István Mészáros makes a compelling argument for an “an all-embracing structural crisis” of capitalism and capitalist rule that has progressed to the point where “even the most blatant and openly admitted violations of established constitutionality are disregarded” (2006: 41). He hints that the crisis has fueled what we call fascist processes in the United States. Yet he never discusses fascism. Unfortunately, this omission consigns the question of fascism, which earlier Marxist theorists like Sweezy considered always present in capitalism, to liberals who completely ignore the requisite capitalist crisis. Similarly, when John Bellamy Foster argues convincingly that the growing instability of the capitalist system since the early 1970s, resulting from the twin processes of financialization and militarization, marks “the end of rational capitalism” (2005) and a more “naked imperialism” (2006), at what point we ask does naked become fascist?

For their part, current liberal interpretations of fascism in America do not consider the financialization/militarization relationship dialectically, but rather as exogenous forces that can be removed or mitigated by a new direction in policy-making. The assumption here is the return to a liberal or more centrist presidential administration and the promise of some kind of “new” New Deal. Herein, the contradictions of these interpretations become all too apparent. Remove dictatorial abuses of power that accrued as a result of militarization in the form of executive excesses by an imperial presidency, and the path opens for a return to constitutionality. Remove the abuses of unregulated financialization and a similar opening appears for a return to productive capitalist enterprise, i.e. “good” as opposed to “bad” capitalism. For us, these interpretations simply ignore the political economy of Pax Americana (i.e. the contradictions of capitalism) in three ways: (1) they do not grasp financialization as necessary to prevent persistent stagnation nor militarization as itself necessary for imposing financialization; (2) they do not see the unfolding dialectic of financialization and militarization as a cumulative process spanning all presidential administrations since Nixon’s conscious efforts to construct the so-called imperial presidency; and (3) they aim to negate the financialization/militarization dialectic by proposing a new variant of Keynesianism (i.e. a “new New Deal”), while glossing over the structural contradictions and dislocations that are the legacy of Pax Americana’s unprecedented role in contemporary world history – as the first debtor empire.

Beginning with repressive measures aimed at neutralizing the political power of labor during the Carter administration, the Reagan presidency embarked on an aggressive foreign policy aimed at restoring U.S. power abroad while simultaneously addressing ways to ensure domestic security.8 Regardless of party affiliation, the U.S. ruling class responded to popular challenges to its power with “law and order” legislation designed to keep labor in its place and punish the unruly. From the creation of the Law Enforcement Assistance Administration (LEAA) in 1968, the federal government has provided increasing support for the professionalization and militarization of law enforcement agencies throughout the nation. The so-called wars on crime and drugs during the 1980s and into the 1990s gave birth to the prison-industrial complex, which incarcerated more than a million African Americans, many who otherwise were likely to be unemployed and therefore potentially problematic.9 Since 9/11 the militarization of foreign policy and the policing of domestic society have seemingly merged as the result of unprecedented executive power. Almost every police force of any size and consequence in America’s cities has military-type units whose training, weaponry and tactics make them more akin to the military’s urban guerrilla warfare groups. Meanwhile, increasingly draconian legislation and executive actions such as the Patriot Act and The Military Commissions Act, among others, aim at rooting out terrorists, illegal immigrants and potential dissidents alike – in a word, all those who make up “the dangerous classes” in contemporary America – in bigger, high-tech detention centers.

The Dialectic of Financialization and Militarization since the 1970s

It is now well established that the United States, the world’s true superpower by the mid-1960s, began its historic decline in the early 1970s. During the so-called “golden years” of American power, capital investment in industrial production, as well as domination over the much of the world’s oil supplies (U.S. oil production was itself peaking around this time), fueled the expansion of American economic power as the basis of Pax Americana. Already by 1950, the United States was responsible for half of the world’s gross product and 60% of its manufacturing (Du Boff 2003). Backed by the Bretton Woods dollar-gold regime, the United States served as the world’s banker, leading creditor and magnet for the world’s supplies of gold as dollars accrued abroad – allowing foreign interests to pay for American imports.

Yet the amazing growth of the U.S. economy and its commanding position in the world market only temporarily compensated for the ever-present tendency toward stagnation.10 As Fred Magdoff notes, the manufacturing sector was producing at close to 85% of capacity during the boom years of the 1960s, reaching its height at 91% of capacity in 1966 (2006: 2). Actual production did not have to reach capacity for stagnation to set in. Despite America’s global control of raw materials, the costs of production relative to prices rose in the U.S. economy, signaling a decline in profitability in the U.S. manufacturing sector by some 40% between 1965 and 1973 (Brenner 2006).11 One way of countering declining profitability at home was for U.S. firms to increase their investments abroad.12 Seeking other avenues of profit to sustain their hegemony over the world market, U.S. firms found it necessary to reroute capital investment at the expense of domestic manufacturing and other parts of the “real economy.” However, the decline of corporate profitability in manufacturing – and in the private economy as a whole – was only one of several contradictions now at work. As the world economy became more integrated, U.S. control over it was declining. By the mid-1960s, U.S.-financed European and Japanese reconstruction had given rise to two potent rivals. As U.S. manufacturing profitability rates declined, European and Japanese firms supplied a greater share of their national markets as well as increasing their exports.13 Even at the height of its power, therefore, the contradictory tendencies that would progressively undermine the productive capacities of the U.S. economy – and therefore of Pax Americana – were already evident.

Meanwhile, the seeds of financialization were being sown. The growth of U.S. deficit spending helped to fuel foreign direct investment as large dollar holdings accrued overseas. In the short term, U.S. businesses profited because large dollar holdings in foreign hands helped to facilitate the sale of U.S. exports. But this changed as the trade balance began to favor Japan and Europe, notably West Germany. The cumulative downward pressures on the economy from declining profitability in U.S. manufacturing and growing competition from German and Japanese imports brought Pax Americana to an historic moment in 1971: the first U.S. trade deficit of the twentieth century, signaling the end of the U.S. role as a leading global exporter of industrial goods (Brenner 2006: 125). Declining profitability and the trade imbalance served to weaken the dollar’s role in maintaining U.S. economic hegemony. When the trade deficit occurred, European and Japanese capitalists worried whether the huge dollar holdings in their central banks were still redeemable in gold. Their fears were well-founded. Indeed, the growing federal deficits used to fund the war in Vietnam and the Great Society programs, coupled with the decline in its current accounts drained the U.S. of its vast gold reserves, which led to the Nixon Administration’s decision in August 1971 to de-link the dollar from gold (Clark 2005: 19; Wallerstein 2003: 18).

It took several years after this de-linking for the U.S. to reestablish its hegemony, albeit on a shakier basis (which would become shakier still in subsequent avatars of financialization). For Peter Gowan (1999: 21), the brilliance of the Nixon strategy was twofold: it forced other states to revalue their currencies on the basis of the dollar’s value at any give time, while the U.S. steered the international financial system increasingly toward control by private financial operators. The strategy was strengthened by the Nixon administration’s 1973 arrangement with oil-producing states to raise the price of crude. Now, private operators could be used as a “political multiplier” to increase the impact of decisions made by the U.S. Treasury. U.S. officials assumed quite correctly that rising oil prices would cause a huge flow of dollars into the oil states that could not be absorbed productively, thus causing them to be recycled back to the United States via the Atlantic world’s private banks which, of course, were dominated by the Americans. But as Gowan reminds us, the real objective of U.S. policy was to cripple the economies of our European and Japanese “allies,” whose economies it was now hoped would suffer huge trade deficits as the price of the oil they needed soared (23). Thus, financialization took the form of petrodollar recycling in the aftermath of the 400% OPEC oil price increase, engineered in great part by the U.S., thanks to the tireless efforts of Henry Kissinger. In William Clark’s apt summary:

The process of petrodollar recycling underpins the U.S.’s economic domination that funds its military supremacy. Dollar/petrodollar supremacy allowed the U.S. a unique ability to sustain yearly current account deficits, pass huge tax cuts, build a massive military empire of bases, and still have others accept its currency as medium of exchange for their imported goods and services (2005: 28).

Thus, petrodollars became the basis for a general strategy based on financialization as the means by which the United States would seek to maintain hegemony over the world economy. As Gowan has said, it was a strategy designed to “liberate the American state from succumbing to its economic weaknesses [so as to] strengthen the political power of the American state” (2003: 23). In retrospect, the paradox of financialization is all too clear. While financialization appeared to strengthen the U.S. position in the world economy, its impact could not negate the processes that were simultaneously undermining it. While financialization furthered U.S. integration into the world economy in an apparent show of strength, its real position in relation to its rivals was weakening.14

The impact of all this on the U.S. domestic economy and American workers was wholly negative and helped give birth to the new disorder of stagflation (high inflation, rising joblessness, and excess capacity). Between 1973 and 1980, inflation soared to 7.1% annually, while unemployment averaged 6.6%. Profit share of corporate income declined by 20%, while the real average hourly wage for production workers fell 11%. Overall, productivity took a sharp downward turn at the rate of 1% annually (Baker 2007: 45f).15 Meanwhile, high inflation led to high interest rates, which produced high mortgage rates. Declining federal funding squeezed public budgets, which forced states and municipalities to raise taxes – or try to in the face of increasing taxpayer resistance (47). The result was increasing debt at all levels of American society that began to accumulate faster than GNP in the U.S. economy. The gap widened during the 1970s and then took off with the debt explosion of the 1980s; by 1987, the total outstanding debt was more than twice as large as the year’s GNP (Magdoff & Sweezy 1988: 14).

Financially, the strict monetarist policies and high interest rates orchestrated by Federal Reserve Chairman Paul Volcker brought on a deep recession by 1981, which resulted in a soaring unemployment rate of 10.8% the following year (Baker 2007: 72). On the domestic front, the renewed drive toward militarizing American society took the form of repressive measures against labor, summed up by the term “order maintenance,” that according to Christian Parenti sought “to physically contain and politically explain away (via racist and often sexist victim-blaming)” the “seismic dislocations” of neoliberal restructuring of the domestic economy (Parenti 2001: 23).16 Wage growth in the private business economy averaged only 0.1% as real wages and salaries for production and non-supervisory workers fell at an average rate of 1%, while the Economic Recovery Act of 1981 reduced corporate tax rates (taxes as a proportion of profits fell by 26%). Federal deficits and private borrowing of all types as percentage of GDP reached 22.1% in the years 1982-1990, an unprecedented level. Japanese lenders, funding perhaps one third of the federal debt during the 1980s, entered the money market to bail out the U.S. government and prevent a bond-market crash (Brenner: 197f).

The coercive measures against labor were accompanied by an unprecedented peacetime military buildup. Following the toppling of the shah of Iran in 1979, the Carter Doctrine announced in January 1980 that the United States would repel by “any means necessary, including military force” all attempts by outside forces to gain control of the Persian Gulf. At the same time, the Nicaraguan Revolution demonstrated that U.S. imperialism’s hold on Latin America was now in question. In response to rising discontent at home and open challenges to the power of Pax Americana abroad, the growing militarization of U.S. foreign policy was accompanied by a conscious effort to mold increasing discipline at home; hence, the emergence of the national security state. Carter’s policies paved the way for the Reagan Administration’s military build-up. The Reagan counteroffensive relied on both increased military spending and a companion economic policy, neoliberalism, aimed at destroying the U.S. welfare state through tax reform and corporate downsizing, while subjecting the Third World to new forms of exploitation and coercion through IMF and World Bank structural adjustment programs.17

The financialization-militarization dialectic established the institutional basis for the intensification of fascist processes. The re-assertion of U.S. military power, especially in the Middle East and Central America, was the occasion for the Iran-contra affair. Iran-Contra marks the point at which quantitative efforts to destroy constitutional authority become qualitative. The creation of a “shadow government” gave the executive branch the power to initiate foreign policy in defiance of congressional law (Boland Amendments). It formulated and implemented policy behind the scenes, relying on private foundations for financing, promoting policies through highly publicized media initiatives that blurred the lines between civil society and government in decision-making, thus establishing the groundwork and precedent for the Project for the New American Century, the blueprint for George W. Bush’s foreign policy. Iran-Contra decisively removed the façade of constitutionality in a bipartisan manner, with Democrats refusing to acknowledge and prosecute “high crimes and misdemeanors at the highest levels of government” (Walsh 1997).

By the beginning of the Clinton years, the dialectic of the dot-com bubble and massive borrowing from abroad – facilitating the dollar-Wall Street regime, free trade, and the extension of cheap credit to the working class – deferred stagnation, and yet these policies anticipated the full flowering of manifold U.S. indebtedness that is at the heart of today’s crises. The Clinton era neoliberal project paved the way for George W. Bush’s domestic repression and naked imperialism: most notably, the Personal Responsibility Act that rolled back some of the last remnants of the New Deal; the explosion of the prison industrial complex via three-strikes legislation, with the related trimming of eligible voters, many minority; the sanctioning of police sweeps in public housing that “stripped public housing residents of their basic constitutional rights” (Smith: 265-68); the creation of the doctrine of humanitarian intervention utilized in both the former Yugoslavia and Haiti, the bombing of Iraq in the no-fly zones, and the signing of the Iraq liberation Act in 1998, all clearly prefiguring Bush’s doctrine of preemption. Finally, the Anti Terrorism and Effective Death Penalty Act (1996) paved the way for the USA Patriot Act.

Over the 1979-95 period, wages were either stagnant or fell for the bottom 60% of the U.S. workforce, with only modest growth for higher-wage workers (Mishel et al. 2007: 5). Employer-provided healthcare eroded steadily during the same period. Meanwhile, the gap between rich and poor widened throughout the period, highlighted by declining living standards, infrastructural failures, increasing crime, and the world’s biggest prison population. Moreover, each recession since the onset of the general crisis has proved to be deeper than its predecessor, thus making the case for the irreversibility of the general crisis even more convincing.18

As for the so-called economic boom during Clinton’s second term, Foster demonstrates that it did not offset the weaknesses of the recovery begun in his first term; i.e. at 3% increase in GDP in 1993-94. The slight rise in real wages was not enough to improve the lives of working-class Americans. More importantly, the boom itself was driven not by investment but by what Foster calls a “consumption-intensive expansion” (Foster 2006b). In the period 1991-98 U.S. households consumed 108% of the increase in after-tax income (Henwood 1999: 126). As Foster put it, the rich were lending to those below them, getting richer as those below them serviced the debt.

To sum up, the protracted period of U.S. decline clearly shows the loss of hegemony. As Foster notes:

It is now widely acknowledged that the world is undergoing a global economic transformation. Not only is the growth rate of the world economy as a whole slowing, but the relative economic strength of the United States is continuing to weaken. In 1950, the United States accounted for about half of world GDP, falling to a little over a fifth by 2003. Likewise, it accounted for almost half of the world’s stock of global foreign direct investment in 1960, compared to a little over 20% at the beginning of this century. According to projections of Goldman-Sachs, China could overtake the United States as the world’s largest economy by 2039 (2006a: 4).19

The Crisis Becomes Acute: 9/11 and the Invasion of Iraq

The general crisis of Pax Americana becomes acute in the period between 9/11 and the onset of the Iraq war in March of 2003. Here, we examine four parts of the acute crisis facing the U.S. (and thus the world capitalist system): (1) the debt/war dynamic, (2) energy, (3) climate, and (4) what we might call the resolution crisis, that is, whether a “new New Deal” can avert an intensification of fascist processes.

(1) Debt/War Dynamic

To understand what we mean by the debt/war dynamic, we must focus principally on three trends: the continuing polarization of wealth and poverty, the increasing indebtedness at all social and institutional levels of U.S. society, and currency wars as they relate to interimperialist rivalry and war.

Readers on the Left know well the growing polarization between wealth and poverty. The gap between capital’s share of corporate income and employee compensation is the greatest it has been in 25 years, and more concentrated as well (Tabb 2007). Andrew Sum has determined that from 2000 to 2006, all 93 million American workers (production and non-supervisory) “had real earnings increases of less than half of the combined bonuses awarded by top Wall Street firms for just one year” (Tabb: 23). Americans making up the current Forbes 400 list are now exclusively billionaires: their combined wealth is $1.25 trillion, approximately equal to the wealth of 57 million households or half of the U.S. population. In 2001, the top 1% owned more than four times as much wealth as the bottom 80%. And according to a study of household wealth by Edward Wolff, the nation’s richest 1% holds $1.9 trillion in stocks, about equal to that of the other 99% (Foster 2007: 12). Meanwhile, some 47 million people are without health insurance and 37 million people are living below the poverty line (Sklar 2006).

The steady deterioration of living standards throughout much of U.S. society since 2001 is connected to loss of manufacturing jobs and the rise of low-paying service employment, also an extension of the protracted crisis. Americans have taken second and third jobs to supplement what has increasingly become a low-wage economy for millions (Baker 2007; Mishel et al. 2007). The level of personal debt in the United States is unprecedented. To compensate for lost income, workers increasingly rely on borrowing, often using credit cards to buy necessities. Total outstanding consumer debt rose from $1,842.3 billion in 2001 to $2,186.2 billion in June 2006. Savings as a percentage of disposable income dropped from 1.8% in 2001 to 0.4% in 2005, and now stand at negative 1.5% (Varzi 2008).20 According to John Bellamy Foster, “the ratio of outstanding consumer debt to consumer disposable income has more than doubled over the last three decades, from 62% in 1975 to 127% in 2005.” Foster adds that “personal bankruptcies during the first George W. Bush administration totaled nearly 5 million, a record for any single term in the White House” and the harsh bankruptcy legislation passed by Congress in 2005 “has made it more difficult for families to free themselves from extreme debt burdens,” a state of affairs certain to produce “ever greater numbers of workers who are essentially ‘modern day indentured servants’” (2006b: 5f).

When Foster penned these words, the dot-com bubble’s burst was mitigated by the housing bubble or “wealth effect,” acting as backup or safeguard for middle- and working-class families as they relied on their housing equity. But of course we are now in the midst of the bursting of the $9 trillion housing bubble – “the largest equity bubble of all time” (Whitney 2007). According to Federal Reserve figures, total U.S. household debt rose from $7.7 trillion in 2001 to $12.8 trillion in 2006.21 The housing crisis has enmeshed the U.S. in contradictions. Witness the Fed’s several recent attempts to mitigate the crisis by lowering interest rates or giving homeowners more time to work out solutions with their “mortgage companies” – surely an anachronism as many Americans try to figure who actually holds their mortgage. Lowering interest rates, cheap credit, was the central cause of the bubble in the first place. Now it comes as the solution to its bursting yet leads to inflation and a further decline in the dollar, exacerbating the flight from the dollar, which threatens its reserve currency status against the Euro.

Ballooning debt has compensated for inadequate and declining wages of workers. The explosion in credit card debt if based in income would have meant a quadrupling of the family wage 1990 and 2003 (Panitch 2008). The debt balloon is now coming to an end. This personal debt is part of a larger debt problem. On Nov. 7, 2007, the national debt breached $9 trillion for the first time (Johnson 2008) – up from $1 trillion in 1981 and $5.7 trillion in 2001. According to Johnson, the U.S. is no longer the richest country in the world. The European Union ranks slightly higher, followed by China and then Japan. Meanwhile, according to the CIA’s World Factbook for 2006, the U.S. had the world’s biggest current account deficit – $811.5 billion (Johnson: 3). Such facts bode ill for the dollar.

When the U.S. invaded Iraq, many leftist commentators noted that the war was about oil, though not about the U.S. domestic supply; the U.S. got most of its oil elsewhere and didn’t need Iraq’s oil. The real issue was control over its flow and defense of the dollar. Direct evidence of the importance of defending the dollar came from renegade administration personnel, like Karen Kwiatkowski, employed in Defense Secretary Donald Rumsfeld’s Office of Special Plans, who noted that the invasion was undertaken in part to secure the dollar as Saddam Hussein and others were in the process of switching from the dollar to the Euro to price their oil. William Engdahl’s conversation with a London banker is worth citing here. In his concluding comments to Engdahl, he noted that the view of London bankers privately was “now we don’t have to worry about that damn Euro threat.” (Clark 2005: 32)

The Euro is a threat because its hegemony would undermine the dollar’s fiat currency status, which allows the U.S. to avoid the fate of other indebted countries. As Clark explains, “most countries around the world are forced to control trade deficits or face currency collapse” which, he explains, is not the case with the U.S. “whose number one export is the dollar itself” (ibid.). Phillips adds that in this situation, the value of the dollar lay in the fact that “because the dollar was the world’s reserve currency, the United States could usually more or less print the money it needed – and the rest of the world, after grumbling, would acquiesce.” Other nations fell in line as long as the United States could offer them military protection and continue to function as consumer of last resort – a role facilitated by the fact that every country must obtain dollars to purchase oil: under these circumstances “foreigners were investing those dollars right back in U.S. stocks” or treasury bonds (Phillips: 277).

This process appears now to be fast reversing. Andre Gunder Frank has noted that “Uncle Sam’s power rests on two pillars only, the paper dollar and Pentagon,” with each supporting the other, “but the vulnerability of each is also an Achilles heel that threatens the viability of the other” (2005: 2). The military protects the dollar and the dollar as reserve currency undergirds the $1.1 trillion military budget, a significant chunk of which goes to oil to run the military in the first place. But this huge military runs up catastrophic debt which weakens the dollar, driving up the cost of imports, and threatening the currency, which would drive up the cost of oil (perhaps doubling it) and imports.

As Clark mentions, a central benefit of owning the world’s fiat currency is that this “greatly minimizes its exposure to currency risk” (2005: 33). Because the U.S. can print dollars to pay for oil, it has until recently been able to avoid the volatility of energy prices faced by other countries. Put another way, Europe’s gasoline prices, for example, are kept at nearly twice those in the U.S. in order to buffer against currency risk: “Without this cushion, a country could experience wild swings in daily prices at the gas pump due to fluctuations in its domestic currency’s valuation relative to the dollar on the volatile international currency market” (Clark 2006: 11).

If the Iraq war was undertaken to protect the dollar, its failures have motivated the flight from it (Phillips 2006: 93). Seven countries have seriously threatened or begun to leave the dollar: Syria, Iran, South Korea, Venezuela, Russia, China, and Saudi Arabia (Hupp 2007). Mike Whitney (2008) has speculated that Bush’s recent Mid-East visit was intended to warn the Saudis against any prospective move away from the dollar. While it is unlikely that countries at odds with U.S. geopolitical interests would just pull their investments without an alternative, Johnson’s numbers above indicate that the EU is such an alternative – especially with the U.S. economy likely to contract due to increased energy costs bound up with the falling dollar and increased import costs. China’s decision to peg its currency to the dollar created a strained homeostasis – the buying up of U.S. debt facilitated the lower yuan which facilitated exports to the U.S. But with reduced imports and the falling dollar, China, holding nearly a trillion in treasury bonds, seems more likely to break the homeostasis (Roberts 2007).

Will the U.S. continue to intensify Gunder Frank’s dollar/war dialectic – with its seemingly self-destructive pursuit of military options abroad, and concomitant loss of liberty at home – in order to shore up its debt and keep the foreign money flowing? Will the Pentagon continue to function as global oil protection service, one whose “own requirements for oil are so great that wars of the future may be fought just to run the machines that fight them?” (Klare 2007: 1) Many commentators believe the U.S. is heading in a fascist direction if it does not abandon this dialectic. Can the U.S. return to a healthy productive economy rooted in republican principles? This is the hope of liberals such as Chalmers Johnson. But what if, as Mészáros (2001) argues, capitalism has passed its peak and, with a structural crisis of capital as the context for the decline in American hegemony, the formerly virtuous circles of consumption are increasingly turning into vicious cycles of destruction and waste? Or what if, due to peak oil, the global economy is itself threatened because of capitalism’s inability to replace the fuels powering global transport?

(2) Energy

The danger of peak oil to the U.S. class structure should be clear. As we will show, there is some evidence oil is peaking now; given that global capitalism, taking oil depletion into account, will need around 35 mbd [million barrels per day] in the next 10-15 years, with the U.S. needing a quarter of this, skyrocketing energy prices and collapse need to be taken seriously. To make things potentially worse, this peaking would be on top of possible currency collapse. Given the grossly unequal and increasingly authoritarian character of the class structure, a democratic response to the upcoming transitions seems less than likely.

The theory of peak oil is pretty simple. It assumes that resources are finite and that a reasonable estimate of remaining resources can be made. Peak oil refers to the point where half the oil in an area, whether the U.S. mainland or the world, has been pumped out. At that point, extraction rates are bound to decline, perhaps gradually, perhaps precipitously. Given that the U.S. is totally unprepared for the oil peak, its timing is crucial as (according to the Hirsch report) it takes 10 years lead time to prepare for peak – assuming it can be prepared for under capitalism. The early peakers say the peak is here, or will be here by 2015. Late peakers push the date back anywhere from five to twenty five years.

Strahan shows that Cheney was aware of the issue of oil depletion as early as 1999, that he was exercised at the self-defeating U.S. policy of sanctions against Iran and Libya which kept U.S. oil businesses from competing with Europe over access to this oil. Cheney noted that:

By some estimates there will be an average of 2% annual growth in global oil demand… along with conservatively a 3% natural decline in production of existing reserves. That means by 2010, we will need on the order an additional 50 million barrels a day. So where is the oil to come from? (Strahan 2007: 2)

Kenneth Deffeyes notes: “In a little noticed news item, on March 6, 2003 the Saudi government announced that their production had maxed out at 9.2 or 9.5 barrels per day. As of 2003, no significant under-utilized oil production capacity existed anywhere in the world” (2005: 44).

Most current estimates see the problem in the same way and ask the same disturbing questions. More importantly, the question is not whether “we are running out of oil.” It is that oil supply will fail dramatically to meet increasing demand. What might be the social and political consequences of peak? This is how the Association for the Study of Peak Oil (ASPO) views the problem:

Because global oil demand is increasing, declining production will soon generate high energy prices, inflation, unemployment, and irreversible economic depression. Regardless of the time available for mitigating Peak Oil impacts, alternative sources of energy will replace only a small fraction of the gap between declining production and increasing demand. Because oil undergirds the world economy, oil depletion will result in global economic collapse and population decline. As oil exporting nations experience both declining oil production and increased domestic oil consumption, they will reduce oil exports to the U.S. Because the U.S. is highly dependent on imported oil for transportation, food production, industry, and residential heating, the nation will experience the impacts of declining oil supplies sooner and more severely than much of the world. (Wirth 2008: 1)

If this argument is anywhere close to correct, fascism might emerge alone from the inability of the U.S. class structure to accommodate peak oil. The basic counterargument, carefully considered by the ASPO report, is that U.S. capitalism, either through the genius of the free market, or through recourse to a green-energy-driven “new New Deal,” will stave off the problem. What is common to both strategies is the view that continued growth is a necessity – not surprising since growth is built into the logic of capital – and that out of this growth, technological “magic bullets” will be found so that lifestyles can remain similar to what they are at present and “the American way of life” will not be threatened. We will consider this argument in some detail in our final section.22

(3) Climate

With the recently released 2007 report of the Intergovernmental Panel on Climate Change (IPCC), along with Al Gore’s film, An Inconvenient Truth, the false debate over global warming seems to have largely ended. And yet the IPCC report, because it is a consensus document, threatens very severely to understate the problems global warming poses: the report in its discussions of climate change basically avoids the questions around non-linear change, tipping points and crises, and assumes that warming will pose great hazards to the planet but will take place at a gradual enough pace that capitalism will be able to adjust if it stops denying the problem and gets to work.

As a series of recent authoritative studies show, global warming is accelerating “three times more quickly than feared.” CO2 rates of increase are triple the 1990s rate, the Arctic Ice Cap and the seas are rising three and two times as fast as predicted (Arctic ice has declined by 7.8% a decade over the last fifty years, three times the rate predicted by average IPCC computer models). In sum, “the dire forecasts of devastating harvests, dwindling water supplies, melting ice and loss of species are likely to be understating the threat faced by their world” (Lean 2007).

Studies of nonlinear changes are intimately related to the possibility of dangerous climate change. Dangerous climate change refers to the likelihood of extreme weather events – floods, drought, stronger hurricanes and tornadoes, sea level rise etc. – and then changes that would accelerate warming itself through positive feedbacks. Ecological crises can become system crises where volatility builds up in the system and leads to a sudden “system flip,” a flip James Hansen has recently warned we have 10 years to stop (interestingly, the same lead time the Hirsch report gave to respond to peak oil).

David Strahan along with others has understood the explosive relation between peak oil and warming, using the metaphor of the short fuse (oil) and the long fuse. But if Hansen is correct, we may not have two fuses but one. And if Warren Buffet has called the new financial instruments weapons of mass destruction, imagine these working in tandem with the oil/warming short fuse and a panicked Pentagon positioning itself to control oil and other peaking resources against this explosive backdrop!

The geopolitical effects of global warming in a world of grotesque inequality, mass poverty, and grassroots fundamentalisms will likely facilitate and reinforce all the global and local trends toward the intensification of fascist processes. As Thomas Homer Dixon has recently argued, “evidence is fast accumulating that, within our children’s lifetimes, severe droughts, storms and heat waves caused by climate change could rip apart societies from one side of the planet to the other.” A panel of 11 retired generals and admirals reporting on the geopolitics of warming see warming as a “’threat multiplier’” “exacerbating conditions that lead to failed states – the breeding grounds for extremism and terrorism” (Dixon 2007).

Hurricane Katrina gave us a glimpse of the social consequences of such events – not only the chaos and incompetence filtered through structures of racial and class oppression but the militarization of emergencies as predicated above by the Pentagon. Recent legislation would facilitate continuing trends here. Future natural disasters would create greater stresses due to increasing resource scarcity, either in the form of higher prices due directly or indirectly to having reached oil peak or due to the increasing problem of water scarcity in the U.S., something predicted to get worse with global warming. David Rind, a climate scientist at the Goddard Institute for Space Studies, has combined the Palmer drought severity index with different climate models and the results for the U.S. are not encouraging.23

Drought is not just a function of man-made global warming but would be reinforced by increasing soil erosion caused by our industrial farming system. Soil erosion impacts fertility (thus food production), which then requires increased and increasingly less effective fertilizers produced on a fossil fuel platform and more water – in short supply due to drought. Fertilizers are especially dependent on natural gas, local supplies of which (in the U.S.) may already have peaked. The Oglalla Aquifer which has powered Midwest food production is being depleted at a rate – 130-160% of replacement – that will empty it in thirty years. This tendency will get much worse given drought conditions in the Midwest. To complicate the dialectic, some studies have shown that with a 1 degree C increase in warming “during the growing season, the yields of wheat, rice and corn drop by 10%” (Brown 2004: 10f). Pfeiffer describes this dynamic as unsustainable, as energy inputs are increasing faster than crop yields and “we have reached a point of marginal returns.” He notes that “the Green Revolution is bankrupt” (2006: 9).

To compound the feedback loops, soil erosion brings on deforestation, since when land loses fertility, more of it needs to be brought into cultivation. This in turn causes soil erosion and both reinforce drought. Amplifying feedbacks from pesticide use have led to the introduction of genetically modified foods that are pest-resistant but destroy the biodiversity required for the crop rotation system that could substitute for industrial farming! There is thus on ecological and financial grounds a serious potential for food crisis, which will, needless to say, inflame the political crisis. In the U.S., this may be exacerbated by the misguided attempt to deal with fuel shortage/inflation by putting millions of acres of valuable farmland to the production of corn-based bioethanol.

By some, nuclear power is viewed as the solution to both global warming and peak oil – and thus to the social and political crises bound to these. It is not (as we shall argue in the final section). But global warming poses serious problems for the nuclear paradigm! Two symptoms of warming, drought and periods of extreme hot weather, can lead to local water shortages, and nuclear power depends upon a reliable supply of water. Helen Caldicott (2006) cites the effect of the calamitous European heat wave of 2003 on power supply in France. Drought and extreme heat robbed its nuclear infrastructure of necessary water. The government “resorted to cooling down its nuclear plants by hosing down their outsides with garden sprinklers supplied by reservoirs” (86). The overheated plants were thus allowed to release secondary coolant waters into the surrounding rivers, further endangering aquatic life. Caldicott notes that nukes were not designed and built with the problems of warming in mind, nuclear planners assuming the problems would “occur on such a slow scale that we would be able to deal with any problems on an operational level” (87).

Despite the increasing consensus about warming, the powers that be have basically made fraudulent commitments to dealing with the problem. Thomas Friedman (2007), celebrant of global capitalism’s flat earth, has recently been given to warning that climate reform can wait no longer. There are “many reasons that later is over,” he notes, but the main reason is “the voracious power of today’s global economy, which has created a situation in which the world is not just getting hot, it is getting raped” (11). This economy is a “monster truck with the gas pedal stuck, so no one can stop it from wiping out more and more of the natural world, no matter what the global plan.”24 In a recent article, George Monbiot (2007a) shows that in fact the world has already nearly written off any serious plan to keep global temperature increase under two degrees centigrade. As he puts it, the “rich nations seeking to cut climate change… lie,” “using figures they know to be false.” To make matters worse, due to human activity, the globe is perhaps losing its capacity to absorb carbon, making our job even more difficult (Heinberg 2007: 13).

If greenhouse gases (ghgs), according to climatologist Malte Menshausen, “reach a concentration of 550 ppm, there is a 63-99 % chance that global warming will exceed two degrees.” Only at 400 ppm “is there a low chance (28%) that temperatures will rise by over two degrees.” As Monbiot (2007a) notes, according to the IPCC’s own numbers, the planet has already exceeded this safe amount – an amount safe enough to prevent system flip (459 ppm – note that the often quoted numbers of around 390 ppm are for carbon dioxide alone). It turns out that “no government has set itself this task [of achieving the low number].” Britain’s goal is to keep CO2 levels at 550 ppm, which translates into 666 (we kid you not) ppm when you consider the other ghgs. What this all in effect means is that the governments have “given up on their attempts to stop dangerous climate change, thus condemn [ing] millions to death.” Monbiot calls on the U.S. and others to engage in a World War II type offensive to combat warming. We look in our next section at whether such a green capitalist Marshall Plan (Monbiot 2006) can weather the coming storms.

(4) “New New Deal”

The basic responses to the three interlinked areas just discussed vary as one might imagine. Chalmers Johnson, as we have noted, sees America headed in a fascist direction if the twin processes of financialization and militarization are not stopped. David Harvey sees continuing interimperialist rivalry, militarization and authoritarianism, or a new New Deal and superimperialism.25 There is a Luddite position, also briefly mentioned, that sees technological society as coming to an end, as doomed to deplete its resource base. Some in this group welcome the end of industrial society and big agriculture and envision a much more egalitarian world built around permaculture and small intentional communities. Others focus on the population explosion enabled by the fossil fuel platform and envision Darwinian die-off. Not surprisingly, many in this group are racialists and nationalists who see keeping immigrants out and reforging tribalist bonds as a high priority. The optimistic position, which we address principally, is that green technologies will be able to prevail soon enough to avert catastrophe, and thus will replace both our energy grid and transportation fuels. The dark version of this position, shared by some Marxists and many environmental liberals worried about fascism, is that the energy and environmental crises could precipitate fascism if these crises are not met in a prompt fashion.

We think all of these positions fail to take seriously the contradictions of capitalism and thus in some form split good capitalism from bad capitalism. There is no good response to these crises under capitalism. All succumb to disabling contradiction. Michael Klare (2008) sees the current world situation as breeding the kind of geopolitical contests that would facilitate the move towards what he in fact calls “energo-fascism.” Klare, as much as he talks about geopolitical conflicts of even potentially doomsday proportions, does not operate with Marxist categories of interimperialist rivalry. For him, the source of geopolitical contest is global oil dependency, more precisely dependence on the unstable oil-producing states of the global “south.” His solution to “energofascism” would be an immediate national commitment to alternative sources of energy before the next big energy shock (whatever its immediate cause). Such a shock – severe to the extent that we continue to be oil-dependent in the same ways – will overwhelm our current energy system, which, “already stretched to its limits, will not be able to absorb a major blow” (Klare 2004: 212).

For Klare, a paradigm shift to green energy will solve our problems. So he sees fascism as essentially a failure of imagination. He implies that the turn to green capitalism is a return to productive capitalism, and away from financialization, bound up as it is with both cheap credit and cheap energy. The need for an out-of-control Pentagon would pass with a paradigm shift as well, since the resource wars fought by the Pentagon – in part to keep itself going – depend upon the aforementioned petroleum complex. Interimperialist rivalry, for Klare, is driven by the decision to seek fossil fuels whereas Marxists see it the other way around, with the decision to seek fossil fuels driven by interimperialist rivalry.

This position is similar in key respects to Jeremy Leggett’s. Leggett, however, would appear less optimistic than Klare about the timing of this paradigm switch. As he sees it, we will be able to replace all fossil fuels with renewable energy, and “sooner than people think.” He even cites a study from Shell asserting that renewable energy “holds the potential to power a future world populated with 10 billion people” with ease, even in the undesirable circumstance in which energy use substantially exceeds per capita use in the U.K. today. Thus will begin the era of “endless energy.” He sees solar power producing enough hydrogen to power all our vehicles (Leggett 2006: 200).

Yet he doesn’t think humans will be able to make the transition or find what Paul Roberts calls a bridging strategy. As Leggett puts it, “the shortfall between current expectation of oil supply and actual availability” will not be able to “plug the gap in time to head off the economic trauma resulting from the topping point” (2006: 198f). He sees “the most probable outcome” “collective denial.” And then “the tsunami will hit.” In the midst of the tsunami, he sees the possibility that the oil peak will lead powerful capitalists to turn to coal and “carbon sequestration technologies.” He rightly views such a strategy with horror and emphasizes the political battle between solar and coal as determining whether we avoid ecological collapse.

In a concluding chapter, Leggett speculates in science fiction fashion on our immediate future. He sees a second great depression, amplified by droughts “in the south and middle of the nation state, decimating the grain and other harvests,” the depletion of the oceans due to stratification and acidification, and terrorist attacks.26 Such a scenario is accompanied by a “rising tide of authoritarian horror.” Fascists “crawl out of the woodwork” and get to work on the poor. Meanwhile, good capitalists, whom Leggett calls cosmopolitan thinkers, take over from the bad capitalists, “fundamentalist thinkers” who got us into Iraq. The fascists emerging from the woodwork, backed by select big business and military figures, stage a coup. Then, in his tale, the sun shines, the greens take over. Thinkers learn how to build their own energy efficient homes, the cosmos unite with the “advent of the communities” to advocate “local energy for local economies for local community” (270). Water returns with the building of solar desalinization plants. Solar capitalism becomes the solution, facilitating decentralization (good capitalism) over centralization (nuclear and coal etc.). Through a paradigm shift to solar and other renewables, centralized capitalism will give way to decentralized capitalism, energy autonomy and therefore personal freedom.27

While it is imperative to go green, there are big problems with green capitalism. The optimistic scenario sees a paradigm shift. But when we look more closely at the details of the shift, its capitalist character will surely exacerbate the crises it’s meant to solve. The paradigm shift calls for either a nuclear renaissance to power the electrical grid or a crash program to build a renewables-based infrastructure. Few call for crash programs in public transport. That would mean scaling back key capitalist industries. So many green capitalists proceed under the assumption that we can keep our lifestyles with the right technologies. These scenarios call for replacement fuels – ethanols and biodiesels made from feedstock or waste – for the 145 billion gallons of gasoline consumed in the U.S. alone. And they envisage hydrogen fuels produced by electrolysis, with the electricity coming from renewables or nuclear.

David Strahan himself test drove a hydrogen-powered Ford Focus. Its ride was utterly quiet and it could achieve a speed of 85 mph. So what’s the problem? One is cost. The current cost for this Ford Focus is one million dollars. Even if significantly reduced, it would remain high, in part due to expensive and nonrenewable materials that go into the fuel cell catalyst. Our entire fuel infrastructure would have to be replaced, perhaps using natural gas as a transition fuel as the new infrastructure was put in place. Right now, 96% of all the hydrogen is made from fossil fuels, mostly natural gas. The efficiencies of this process are not great. Converting natural gas to hydrogen is about 80% efficient on average. Liquefying the hydrogen is 70% efficient. Turning liquid to compressed gas – 5000 psi – is around 90% efficient and the fuel cell technology is 50% efficient. That comes out to around 25% efficient. This makes the hydrogen fuel cell produced from natural gas less efficient than the Prius hybrids, and the whole production process emits so much CO2 that there’s no real basis for choosing hydrogen over the best hybrids (and the hybrids are both roomier and much less dangerous). Compressing the hydrogen to 5000 psi necessitates an “extremely heavy” cylindrical tank. Hydrogen, due to the small size of the molecule, is leak-prone and so prone to explode.

Some might argue that all this is beside the point given that the dream is to run the hydrogen economy from renewables. But this is where efficiencies once more loom important. Since it takes so much more energy to crack the hydrogen bond (separate it from water) compared to the energy the hydrogen itself delivers, producing hydrogen from electrolysis via renewables renders the whole project misguided. One of the reasons hydrogen is produced from natural gas and other nonrenewable sources is that it takes 10 times more energy to produce the hydrogen from electrolysis than it does from methane. What this means is that to run a hydrogen fuel economy that replaced the current fuel economy of around 145 billion gallons of gasoline consumed per year – assuming the same number of cars and the same number of miles driven – would require 520 gigawatts of additional power (a standard nuclear plant is 1 gigawatt). So this would mean 520 new nuclear plants (5 times what the U.S. currently has), or 577,000 wind turbines, or 14,000 square miles of solar panels. This would indeed be an immense infrastructure, just for transportation, and at this scale itself a great ecological danger!

Joe Romm, a former hydrogen proponent as a senior official in the Energy Department under Clinton, has said such a use of renewables, apart from the scale issues, would in fact be criminal as renewables could be put to far better use in the effort to halt warming: replacing the electrical grid not the transportation infrastructure. Strahan concludes that “hydrogen as a transport fuel seems utterly incapable of mitigating either global warming or the last oil shock” (2007: 96).28

The bottom line is this: green technologies under capitalism’s expansionary imperative encounter either the EROEI (energy return on energy invested) problem, the paradoxes of efficiency, or tradeoff problems. The first problem especially impacts attempts to rescue more fossil fuels but also impacts the hydrogen economy as seen above; the second refers to Jevons’ paradox where greater unit energy efficiency is undercut by the expansion of the totality. As the authors of The Weight of Nations note, “efficiency gains brought by technology and new management practices have been offset by [increases in] the scale of economic growth” (Foster 2002: 23). The main tradeoff problem with biofuels is cars versus food, given the enormous land use required. With the declining yields and growing expense of industrial agriculture, the business-as-usual mitigation of one catastrophe only produces another.

Greens, even very progressive ones, have not faced these disabling paradoxes, what Foster calls the “treadmill of production” (2002: 44). Paul Craig Roberts, who sees green capitalism as the antidote to the Bush fascists, at one point in his book The End of Oil senses the problem but then proceeds to ignore it. He considers the possibility that the U.S. will not be able to reduce its carbon sufficiently even after switching to carbon-free fuels (a task whose enormity we have seen): “it may require the mammoth U.S. economy to reduce its overall and per capita consumption – perhaps significantly” (2004: 301). Leggett himself doesn’t seem to get that capitalism is about endless growth and that endless growth and local sustainable communities as a rule are incompatible.

Stephen Schneider (2003), a noted climate scientist, writing before peak oil was on the (or his) radar, has spent much time rebutting claims by global warming skeptics that mitigation efforts would be too expensive. Schneider calculates that the cost of stabilizing atmospheric CO2 at 350 ppm (it is approaching 400 ppm today) by 2100 would be 18 trillion in 1990 U.S. dollars. This is a huge amount, he notes – about half global GDP in 2003. But, averaged out over one hundred years, this wouldn’t be very costly at all, assuming GDP (and global income) would grow by a factor of ten. Schneider’s confidence in being able to solve the climate problem under capitalism is, to put it mildly, at odds with the ASPO report we cite, and of course he assumes a kind of mythical capitalism, one not wracked by crises. But the idea – unless you buy the myth of dematerialization – that a tenfold increase in GDP would be sustainable strikes us as nearly insane. One wonders how much of the planet would be covered in wind farms and photovoltaic fields – putting aside the issue of acquiring the resources to produce these.

Writing in 1995 before worries about peak oil, Foster noted, “it is unlikely that the world could sustain many more doublings of industrial output…without experiencing a complete ecological catastrophe.” Perhaps “conservation” could solve the problem. Way back in 1977, Jimmy Carter warned the nation it “faced ‘a national catastrophe’ unless we adopted strict conservation measures to reduce the rapid depletion of oil and natural gas reserves” (Wirth 2008: 2). But as Hannah Arendt has noted, “under modern [capitalist] conditions, not destruction but conservation spells ruin” (Foster 2007: 2).


It is our view that a serious enough crisis of political economy, one with no convincing resolution, would produce an intensification of fascist processes that would in turn intensify class struggle in U.S. society. But the process would be driven by the anarchy and irrationality of capital accumulation in the context of imperial decline and the emergence of capital’s absolute limits.

Though we cannot predict what will happen next or when, there is no doubt that the material conditions of American social and political life are contributing daily to the deepening of the acute crisis. As we go to press, the New York Times carries prominently placed stories about stagflation (February 21) and the calamitous situation faced by more than 10% of U.S. homeowners whose mortgages are higher than the value of their houses (February 22). Stagflation, a fixture in American capitalism since the beginning of the general crisis in the early 1970s, is now being discussed with great anxiety. Not since the Depression have we seen mortgage values exceed actual values. Oil has hit $100 a barrel and supply is still frozen. Investment has not been forthcoming to free that presumed endless supply of abiotic oil (Heinberg 2004). Beyond the technicalities, there is overwhelming evidence that the U.S. is headed to recession – if not already in one depending on regional conditions.

The fascism we see may be significantly more dysfunctional than past forms. We do not see it, as does Leggett, as a prelude to the solar capitalist era. If ecosocialists like John Bellamy Foster are right, capitalism will not be reconstituting itself as a new regime of accumulation. If capitalism is becoming unsustainable, if U.S. capitalism in particular – due to its free market worship and auto-based economy among other things – is especially prone to sustainability crises, this decline of capitalism is no cause in and of itself to celebrate. The working class will be hit hardest, perhaps harder than ever, black and Latino workers hardest of all. Competition for resources will almost surely intensify racial and gender inequality, along with anti-immigrant hysteria, even as the United States may be electing its first black president. The ideological climate is likely to be confusing, chaotic and volatile. Thus, the call to organize is urgent; moreover, if we are entering what is in effect a sustainability crisis, the fight must no longer be for a bigger piece of a growing pie, but for massive redistribution immediately – working-class power for distributive and contributive justice.29


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1. In this paper, we will not consider several recent works from the Right, such as those by Norman Podhoretz (2006) on world war and Islamofascism or Jonah Goldberg (2007) on so-called “liberal fascism.” From a libertarian point of view Goldberg correctly sees the corporatist component of liberalism but then equates corporatism with “friendly” and “unfriendly” fascisms. He sees libertarian capitalism as the antidote to fascism which, oddly enough, makes him a bedfellow of the liberals, who now want to separate good from bad capitalism (the latter leading, for some, to fascism). In a parody of the dialectical method, Goldberg’s bad capitalism is the liberal’s good capitalism and vice versa.

2. For example, Chris Hedges (2006: 194-201) recalls how, at Harvard Divinity School 25 years ago, his ethics professor James Luther Adams warned students that they would one day find themselves fighting “Christian fascists.” Echoing the 1930s prediction of Sinclair Lewis that fascism would come to the United States wrapped in the American flag and bearing a Christian cross, Adams believed that the transformation of the U.S. as a global Christian empire would be facilitated by American fascists wearing neither swastikas nor brown shirts. Robert Paxton concludes his recent study of European fascism with a discussion of possible contemporary forms, including Protestant fundamentalism, which he says could become a “functional equivalent” of fascism “to regenerate and unite a humiliated and vengeful people” (2004: 203). In his widely read book on Kansas, Thomas Frank (2004) examines the culture of Red State dysfunctionalism and its striking resemblance to the irrationalism of Italian and German fascist movements. See also the brief treatment of fascism and religion by Davidson Loehr (2005).

3. The most recent example is Naomi Wolf’s The End of America (2007). Wolf argues that the tactics used by the Bush administration in abusing the Constitution reflect those the Nazis employed to undermine the Weimar Republic. Rejecting comparisons between the United States in 2007 and Nazi Germany, Wolf says a “fascist shift” has occurred in the United States, suggesting that the “10-steps to dictatorship” taken by the Thai military in its 2006 coup are currently “being put into place here in the United States today” (13f). Wolf ignores political economy and class struggle, viewing fascism in strictly political and ideological terms. Her preventive is to rally all patriots around the seminal ideas of the Founders who, she says, understood the fragility of democracy better than we do. Wolf here falls in line with others who have similarly linked the potential for fascism in America with the machinations of the Bush administration and the neoconservatives. Among these are Joe Conason (2007), Mark Crispin Miller (2005), Lewis Lapham (2005), Lawrence Britt (2003), and Carl Davidson & Jerry Harris (2006).

4. There is also a Luddite position that calls for the end of civilization. The works of Derrick Jensen are most prominent in this genre.

5. We borrow the term “fascist processes” from Pem Buck (2001), who conceptualizes fascism as a process in order to avoid freezing its contemporary forms into its past forms. Buck stresses, as we do, fascist processes as a property of capital that waxes and wanes with major organizational changes in class rule. She notes rightly that only the ruling class can institute fascist processes.

6. Gregory Meyerson & Michael Joseph Roberto, “It Could Happen Here,” Monthly Review Commentary www.monthlyreview.org (October 2006). One of the central advantages of this functional definition is that it allows us to zero in on fascism’s changing forms in the same way that Marxists analyze imperialism’s changing forms. We thus avoid sterile debates over necessary empirical features of all fascisms, as in Matthew Lyons’s (2007) argument that “revolutionary populism” is a necessary ideological feature of all fascisms. If we were to follow such prescriptions, a massive increase in repression in the U.S. could not be viewed as “an intensification of fascist processes” unless it took revolutionary populist form. As we have said in our Monthly Review piece, we think it’s best to follow George Jackson (1990) in his comment that “we will never have a complete definition of fascism, because it is in constant motion, showing a new face to fit any particular set of problems that arise to threaten the predominance of the traditionalist, capitalist ruling class” (118).

7. See Cormac McCarthy’s Pulitzer Prize-winning novel of extreme dystopia, The Road. In film, see Children of Men. It is important to note that post-apocalyptic and dystopian fiction is by no means necessarily hopeless. On the contrary, the best fiction of this sort is a wake-up call, not a call to fatalism. George Monbiot (2007b) has argued, interestingly, that The Road communicates the dangers of global warming (without any mention of the term), and thus the necessity to combat it now, more powerfully than even the most recent (2007) report by the Intergovernmental Panel of Climate Change (IPCC). Octavia Butler’s post-apocalyptic fiction is also immensely hopeful, even when it employs fatalism as a central trope. For example, in the Lilith trilogy (2003), the human species is nearly destroyed by a genetic flaw that leads humans to persecute the different, the other. Does Butler really think that racism originates in a genetic flaw? No. But the feelings of horror induced in the reader by this trope function to create a rage to change what presumably cannot be changed.

8. While the Reagan administration gave its full support to counterrevolutionary forces in Central America, it also foresaw the possibility of resistance at home. Accordingly, it developed plans for martial law, giving sole power to the president and authority to the Federal Emergency Management Agency (FEMA) to round up dissidents, aliens, enemies, etc., and place them in detention centers.

9. In July/August of 2001, an editorial in Monthly Review (vol. 53, no. 3) reported that both political parties gave equal support to “getting tough on crime” legislation. “Criminal justice expenditures grew (in constant 1996 dollars) from $234 per person (in total population) in 1982… to $454 per person in 1996” (14). The editors emphasized that these expenditures meant cuts in health, welfare, and education spending. States went on a prison-building boom, more than doubling capacity – only to face overcrowded conditions.

10. In numerous studies spanning the period of the general crisis, Harry Magdoff and Paul Sweezy developed their position on the persistence of stagnation, which, they explained, was caused by a shortage of opportunities for investment of the surplus. John Bellamy Foster has emphasized repeatedly how Sweezy and Magdoff “have helped us to understand why U.S. capitalists necessarily turned to financial products as the solution to existing shrinking opportunities in the so-called “real economy.” Foster reminds us (2007: 2f) that Sweezy offered “the most succinct expression” in 1997 of the need for financialization as a response to two major trends operating in the world economy following the global recession of 1974-75, the slowdown in the overall rate of growth, and the proliferation of multinational corporations. As monopolization swelled profits, the demand for further investment in markets controlled by the multinationals declined, thus slowing down capital accumulation. The decline in real investment precipitated and then fueled financialization.

11. There is considerable debate about Brenner’s thesis, which basically argues that the decline in profitability, particularly the rise in production costs relative to prices in the manufacturing sector, was in the main caused by interimperial struggles between the United States, Germany and Japan. James Crotty and others have criticized Brenner’s thesis, because it dismisses labor militancy as a factor in determining constraints on profit. While we note the significance of the debate, the central point for us is that the rate of profit indeed fell.

12. Between 1950 and 1965, the value of foreign assets of U.S. firms grew at twice the rate of GDP, from $11 billion to $47 billion; foreign earnings as a share of after-tax profits of U.S. non-financial corporations rose from 10% to 22% (MacEwan: 38).

13. Between 1967 and 1978, U.S. based firms increased their foreign investment in absolute terms, but their share of the global total began to decline by 5% (MacEwan: 42).

14. Michel Beaud (2001: 268) has observed that the share of imports and exports within America’s GNP rose from 7-8% to 18-21% during the 1970s. U.S. corporations increased overseas investments from $100 billion in 1973 to $220 billion in 1980, while the growth of investments in the United States by non-American corporations was even greater, from $20 billion to $60 billion in the same time period. Meanwhile, the Ford and Carter administrations kept pumping dollars into the economy to finance the rising federal, trade, and current accounts deficits – all of which served to push down the value of the dollar. Between 1975 and 1979, the dollar fell by 26% and 27% against the yen and mark respectively. This made credit easier for U.S. producers who now sought to increase investment in manufacturing, which in turn led to a temporary increase in U.S. exports from 1975 to 1979. But the inability to improve profitability, added to the increasing trade imbalances – all operating against the contracting world market – prevented a revival of the productive economy, and the structural contradictions of the U.S. economy deepened (Brenner 2006: 166ff).

15. According to Baker, unemployment for African Americans reached 21% at the start of 1983.

16. Some 2.3 million manufacturing jobs disappeared between 1980 and 1985 (Parenti: 23). Brenner (2006: 196) says that while union membership in absolute terms had held up reasonably well into the mid-1970s, it plummeted by an annual average of 817,000 between 1979 and 1983, then 316,000 between 1983 and 1987. Brenner also provides statistics on the sharp decline of union elections and on the number of unfair labor practices committed by management during union organizing drives.

17. Dean Baker’s recent work, The United States Since 1980 (2007), demonstrates how the economic policies of successive administrations from Reagan to Bush II regarding trade, immigration, labor-management relations, macroeconomics, deregulation of industry, and minimum wage, contributed to a massive upward redistribution of income that widened the gap between wealth and poverty in America. Baker’s book relies heavily on first-rate scholarship, such as the 2004-05 volume of the ongoing The State of Working America by Lawrence Mishel, Jared Bernstein and Sylvia Allegretto. Both books connect the U.S. decline over the last quarter century to the collapse of a once vibrant industrial economy that ended relative prosperity for a substantial portion of the American working class, while increasing the share of the national income of the richest 5% of families by more than one-third.

18. According to Baker (2007: 56), the 1974-75 recession was much more severe than any prior postwar slump, with unemployment peaking at 9% in May 1975. While the economy bounced back and grew at a healthy pace for the next two years, it never returned to its pre-recession prosperity. This marked the beginning of a pattern for all subsequent recessions. In April 2003, the editors of Monthly Review reported that the recession which began in March 2001 was more than a traditional downturn in the business cycle, reflecting a new and deeper round of stagnation caused by excess capacity and the absence of new growth stimuli in the United States and the global economy. The evidence for substantial recovery was indeed lacking. Having lost more than two million jobs since the beginning of the recession, Americans faced a jobless recovery, the worst hiring slump in almost twenty years. In the initial phases of the four recessions preceding that of the early 1990s, workers losing their jobs permanently averaged 51%; in the initial phase of the 2001 recession, the share of permanent layoffs was 87%.

19. This figure for China it should be noted is based on assumptions that we (and Foster) would question as it takes unproblematic capitalist growth for granted, as if oil weren’t peaking and the environment facing perhaps a critical tipping point.

20. The data on savings from 2001 to 2005 come from a report in The New York Times (September 9, 2006).

21. Global Policy Forum www.globalpolicy.org

22. In the debate between early and late peakers, the evidence in our view does not favor the late peakers. They have made several predictions that have turned out way off. For one example, we only need turn to the United States whose own oil peak was accurately predicted, on the basis of different methods, by M. King Hubbert (in 1958) to be 1970. The United States Geological Survey (U.S.G.S), one of the cornucopians, predicted in the sixties that U.S. oil would peak in 2000. As Deffeyes (2005) has noted, the U.S.G.S in the year 2000 “estimated a U.S. total of 362 billion barrels” for unproduced reserves, compared to an estimate of 228 billion barrels using Hubbert’s method. The problem with the high estimate is that it can’t explain the peak unless, as Deffeyes notes, “the USGS was counting on bringing in Iraq as the 51st state.” Crucially, as a rebuttal to techno-optimists, Deffeyes points out that “improved technologies and [financial] incentives have been appearing all along and there appears to be no abrupt dramatic improvement that will put an immediate bend in the straight line” (39). The reason the unproduced portion (the 228 billion) is so important is that the curve drawn on its basis fits the oil production history. If it did not, he says, “we wouldn’t be talking about it”; but “because it does fit, the possibility arises that the unproduced fraction of the total oil dominates over all other factors…. The price of oil matters; it just doesn’t matter very much” (40).

23. In one model, California and the Rocky Mountain states were headed for certain summer drought while the Midwest and Northeast had (respectively) 60-80% and 40-60% chance of drought. In the other model, the whole continental U. S. would suffer summer drought. Water resource managers hearing Rind’s reports asserted that adaptation under such conditions would be impossible. See Kolbert (2006: 107-10).

24. Friedman quickly returns to normal after his moment of systemic critique and offers individual solutions to systemic problems: “if you want to help preserve the Indonesian forests, think fast, start quick, act now.”

25. In his book on the new imperialism, Harvey (2003: 209) sees the solution, “albeit temporary,” as “some sort of new ‘New Deal’ that has a global reach.” In the book that follows on neoliberalism (2005) he again takes up the question of a new New Deal. We discuss Harvey’s contradictions around any new New Deal in our forthcoming book.

26. Warming causes stratification which in turn shuts down the circulation of nutrients from colder waters to warmer.

27. See Scheer 2007, for a similar argument about solar power and decentralization.

28. One of the green technologies with the most promise involves producing ethanol from waste material. In one version of the technology, cellulose is broken down by enzymes; in another, by bacteria. One company in Illinois has claimed to be able to produce ethanol for about $1 per gallon. The process is hyperefficient and produces virtually no CO2. As Strahan notes, however, in Canada, a country with much agricultural waste product, much of the straw must be used for soil amendment and the totality of what is left can produce about one tenth of Canada’s fuel use today. It is a great technology, but not under capitalism. Having the population choose between food and a $100,000 car will not mitigate the contradictions leading to an intensification of fascist processes.

29. The term “contributive justice” comes from Paul Gomberg (2007); justice goes beyond distribution to include as a necessary feature the need for meaningful contribution to society, a contribution not possible in a division of labor based on competitive equal opportunity.